Aldi Foods Pty Ltd v Moroccanoil Israel Ltd

1. Ms B submits that in assessing the parties' contributions, the primary judge failed to refer to BDC's losses in the three financial years post-separation. She refers to the judge's identification of the necessary task of assessing contributions from mid‑2005 until September 2018.[52] She also points to the judge's reference to profits generated post-separation, submitting that the evidence does not disclose such profits having been made.[53]
2. She submits that the judge must be taken to have failed to take into account the significant losses by the business post-separation.[54] Further, the judge failed to explain why such weight was placed on the financial years from 2011 to 2014 in light of the subsequent losses.[55]
3. In support of particular 4, Ms B submits that the judge referred to BDC's 'very respectable results' in the 'other years' (being the years apart from 2011 to 2014), indicating that he overlooked the significant losses in the 2016, 2017 and 2018 financial years.[56]

1. In our view, reading the judge's reasons as a whole, it cannot be said that he failed to take into account BDC's losses in the 2016, 2017 and 2018 financial years.
2. The judge acted upon the opinion of the single expert, whose opinion was not challenged by either party. The expert referred to, and relied upon, BDC's trading losses in the 2016, 2017 and 2018 financial years. He observed that BDC's earning forecast was uncertain because of those losses, and therefore BDC should be valued on the basis of net assets rather than future maintainable earnings.[57] The judge noted that the expert valued BDC on a net tangible asset backing basis.[58] The judge's reliance on the expert report, and his reference to the basis upon which the expert valued BDC, indicates that he was cognisant of BDC's losses in the 2016, 2017 and 2018 financial years.
3. Particular 1 challenges the judge's reasoning at [105] ‑ [110], set out at [28] above. Those paragraphs must be read in their context. In them the judge was considering, and responding to, Mr P's evidence concerning profits generated in the financial years ending 2006 to 2015 inclusive, with particular focus on the financial years ending 2011 to 2014, in which high levels of gross profit were generated. The years 2006 to 2015 were evidently focused on by Mr P as the years in which the parties were in their relationship. He contended that the cash flow generated by BDC's trading sustaining the profits made by the company and paid to Mr P as dividends or loans, contributed substantially to the parties during the period of their relationship. The judge accepted that submission, as was well open to his Honour. BDC's losses in subsequent years did not detract from, or bear on, this conclusion. While BDC's profits were distributed to the parties and thus gave rise to contributions, the same is not true of its losses. The losses remained in BDC; they did not become the parties' losses. The only effect of BDC's losses upon the parties was their effect on the value of BDC. As already noted, that was not overlooked by the judge. The judge's failure to mention the subsequent losses in this context does not reveal error.
4. Each of particulars 2 and 3 impugns a single paragraph of the reasons: respectively, [150] and [151], set out at [32] above. Read in its context, what is said in [150] is evidently a reference to the matters outlined in [103] - [110]. For the reasons given in relation to particular 1, the absence of reference to BDC's losses in the 2016, 2017 and 2018 financial years does not reveal error.
5. Particular 3 complains that the judge failed to mention BDC's 2016 ‑ 2018 losses in observing, in [151], that Mr P had continued to operate BDC since the de facto relationship ended in September 2014 and had serviced the line of credit debt to a significantly greater degree than Ms B. There is no challenge to the judge's finding[59] that Mr P made a net positive contribution of almost $90,000 into the line of credit in the period 1 September 2014 to 30 June 2016, while Ms B made a net withdrawal of about $47,500.[60] That finding amply sustains the judge's finding at [151] that Mr P serviced the line of credit debt to a significantly greater degree than Ms B. Given the context of his Honour's remarks, and the point he was making, there was no occasion to mention BDC's losses. Particular 3 is without merit.
6. For similar reasons, there is no substance in the complaint made by particular 4. That particular criticises the judge's observation that '[t]he significance of the evidence about the payments into and out of the joint line of credit is that it is part and parcel of [Mr P's] case that he has contributed post‑separation by continuing to work full‑time in the business operated by [BDC] and has, by and large, used the profits so generated for joint benefit'.[61] Whether Mr P's contributions, by way of payments into the joint line of credit, were sourced from profits, or otherwise derived in the course of his full‑time work with BDC, was not material. What was material to the judge's assessment of the parties' respective contributions was the unchallenged finding as to the relative contributions to the line of credit in the period already referred to.
7. For these reasons, there is no merit in the complaints the subject of particulars 1 ‑ 4.

Particular 5: failure to consider the impact of the economic boom

1. Particular 5 contends that the primary judge erred in fact or alternatively failed to give adequate reasons in finding, at [112], that 'the evidence overwhelmingly indicates that the financial performance of [BDC] is largely a function of the application of trade and other skills of the applicant ... particularly in those four extremely profitable financial years'. Ms B notes that the judge identified that a major factor in BDC's performance was that it was the successful tenderer in relation to very lucrative government building contracts.[62] She submits that the judge failed to analyse that factor or the 'simple impact of the economic cycle'.[63]
2. This complaint misses the point. The judge's task was not to conduct an open‑ended inquiry into all factors that had contributed to profits made by BDC. The judge's task was simply to weigh the competing contributions of the parties. The impact of the economic cycle is not germane to that task. The judge was not required to refer to it in his reasons and it provides no logical basis to impugn his finding at [112].
3. Further, Ms B submits that, in making the finding at [112], the judge failed to consider, or adequately consider, the indirect financial contributions of the appellant to BDC, including permitting her property to be used as security for BDC's loan facilities.[64] This submission appears to mirror, or overlap with, the complaint made by particular 6 and is conveniently dealt with under the rubric of that particular.

Particular 6: errors in assessing Ms B's contributions to BDC

The primary judge erred in assessing the materiality of [Mr P's] initial contribution of the shareholding in [BDC], at [123] and [149], by failing to adequately identify and evaluate [Ms B's] direct and indirect financial contributions to [BDC], in particular by failing to:

(a) attach sufficient weight to [Ms B's] bank guarantees and provision of security over real estate in which she had an interest, and the timing of the same, for the benefit of [BDC] (provision of security is mentioned at [112]).

(b) take into account that the joint equity line of credit, into which [Ms B] deposited inheritance funds and proceeds from the sale of real estate owned before the start of the de facto relationship or inherited during the de facto relationship, was used by [BDC] from time to time as an overdraft facility (use of these funds for joint purposes is mentioned at [96] and [99]).

(c) recognise that the single expert's valuation of [BDC] fell from $1,584,000 as at 30 June 2017 to $1,168,000 as at 30 June 2018 and was based in both cases upon net asset backing and not upon future maintainable profits (the valuation method was mentioned in a different context at [46] - [48]).

1. Ms B submits that 'viewing [122] and [123] as a snapshot', the comparison undertaken by the judge fails to consider that Ms B made substantial direct and indirect financial contributions to BDC, whereas Mr P made no or nominal contributions to Ms B's assets, namely the Broome property and the ASX listed shares.[65]
2. No error is disclosed. Particular paragraphs of the reasons are not to be viewed 'as a snapshot'. Rather, the reasons must be read as a whole. Further, the substance of the particular is that the judge did not give enough weight to Ms B's contributions as subparticularised in (a), (b) and (c) of particular 6. The judge did not overlook Ms B's contributions to BDC. He noted that she was a paid employee of BDC for several years and that she allowed her property to be used as security for BDC's borrowings, describing the latter as important.[66] The judge also noted that, in building the value of his shareholding in BDC to a very substantial level, Mr P was assisted by Ms B.[67] The weight to be given to the parties' relative contributions was a matter for the judge. The assertion, in paragraph (a), of insufficient weight does not reveal appellable error, see [40] above. The same is true of Ms B's submission that the judge failed to give these matters their proper s[68]nificance.68
3. The judge found that:

(1) Mr P worked full-time as managing director of BDC at all material times;[69]

(2) Mr P had, while Ms B did not have, the expertise and experience to conduct BDC's business;[70] and

(3) Ms B was employed for a period of several years as bookkeeper and allowed property registered in her name to be used as security for BDC's borrowings.[71]

1. Ms B did not point to any evidence as to the extent to which BDC's funding of its construction work depended upon the guarantee and security provided by Ms B. It may be inferred that the guarantee and security would have assisted in BDC's funding arrangements in connection with its construction work. But the question for the judge, having heard all the evidence, was (relevantly at this point) to determine the degree to which the respective contributions of the parties contributed to the financial performance of BDC. That in itself was, on the evidence in this case, an evaluative judgment. In order to challenge the finding, Ms B must establish that the judge's finding was wrong and should be corrected.[72]
2. No error has been established in relation to the judge's finding that the financial performance of BDC was, in all the circumstances, largely a function of the application of Mr P's trade and other skills.
3. Ms B also submits that the judge overlooked her contributions to BDC made indirectly through her payments of substantial sums into the parties' joint equity line of credit, enabling the acquisition of joint properties which, in turn, were used as security for BDC.[73]
4. There is no merit in these submissions. The judge noted, and placed appropriate weight upon, Ms B's payments of substantial sums into the joint line of credit, those sums having been received under her father's will or as proceeds from the sale of assets.[74] As already mentioned, the judge found that the parties formed an economic partnership during their relationship, embarking on an ambitious investment program with the common intention of maximising their wealth for their joint benefit and future financial security.[75] In that context, the judge was not required to give Ms B further credit for her payments into the joint line of credit by bringing them to account as a contribution to BDC. In any event, to the extent that her payments may be seen as an indirect contribution to BDC in enabling it to continue to conduct its business, they provide no sufficient basis for this court to conclude that the judge's finding that BDC's performance was mainly attributable to the efforts and knowledge of Mr P was erroneous and should be corrected.
5. For these reasons, there is no merit in particular 6.

Particular 7: errors in assessing the significance of Ms B's contributions of the Broome property and the ASX listed shares

The primary judge erred in assessing the materiality of [Ms B's] initial contributions of the unencumbered property at [Broome] and the ASX shares (as supplemented by inheritance) at reasons [122] - 125]:

(a) by failing to take into account that these two categories of property comprised 13.8% of the net property of the parties as identified at reasons [72].

(b) by failing to take into account that [Broome] was used as security for the parties to acquire further joint property and still remains as security (trial exhibit 2).

(c) by failing to take into account that [Mr P] made no material financial contributions to the acquisition, conservation or improvement of the ASX shares.

(d) by failing to take into account, at reasons [116], that [Mr P's] indirect financial contributions to [Broome] through [BDC] were quantified by [Mr P] at $25,886.

(e) by taking into account irrelevant considerations such as 'the current composition of the asset pool is to a large degree a matter only of historical accident' (reasons [124]) and 'It is highly unlikely that the parties commenced their de facto relationship with an intention to keep assets away from the reach of the other in the event of the relationship breaking down' (reasons [124]) and the parties formed 'a true economic partnership' (reasons [92] and [146]).

(f) by failing to take into account, in reasons [125], that the 'fairly high rent' earned by [Ms B] from the leasing of [Broome] was deposited into the joint equity line of credit from 2005 until November 2015 and used for joint purposes, especially when the relevant paragraph from [Ms B's] trial affidavit was referred to, in a different context, at reasons [170].

(g) by failing to take them into account in the 'quantitative reflection' of the evaluation of contributions (reasons [144] - [145]) at reasons [147].

1. Ms B emphasises the value of the Broome property and ASX listed shares in proportion to the total asset pool, being 13.8% of the pool.[76] She says that Mr P made a minimal contribution to the Broome property through BDC ($25,886) and no contribution to the ASX listed shares.[77] She submits that irrelevant considerations, described in particular (e), tainted the primary judge's view of these contributions.[78] She further submits that the primary judge failed to refer to the Broome property and ASX listed shares when his Honour was conducting his quantitative reflection.[79] Ultimately, Ms B submits that this culminated in the primary judge erroneously assessing the materiality of Ms B's contributions in respect of the Broome property and the ASX listed shares.[80]
2. Paragraphs (a) - (d) of particular 7 assert that the judge failed to take into account the various matters there stated. In our view, it cannot be concluded that the judge failed to take these matters into account. As to (a), the judge set out the respective values of the various assets.[81] There is no reason to suppose that he lost sight of this in his analysis of the parties' contributions. Contrary to what is asserted in (b), the judge noted that, for the purposes of their ambitious investment program, the parties had recourse to substantial bank debt facilities secured over both the properties they acquired and properties standing in Ms B's sole name, the latter evidently referring to or encompassing the Broome property.[82] As to (c), the judge recorded that Ms B's ASX listed shares were held by her at the commencement of the relationship,[83] or inherited by her from her father.[84] The judge did not need to spell out the obvious corollary that Mr P had made no material financial contributions to the acquisition, conservation or improvement of the shares. As to (d), there is no reason to suppose that, in making a general observation as to a contribution made from BDC's resources to the Broome property, the judge overlooked the amount in which they had been quantified.
3. The matters the subject of the complaint in paragraph (e) are not properly characterised as irrelevant considerations. They reflect the judge's inferences or conclusions, following his evaluation of the evidence as a whole. In our view, on the findings of fact made by the judge, the observations were well open to his Honour.
4. Paragraph (f) points to the judge's failure to mention the deposit by Ms B of the rent she earned from the Broome property into the joint equity line of credit. Reading the paragraph in its context, the failure to mention that fact falls well short of sustaining an inference that the judge failed to take it into account in his overall evaluation. In [125], the judge was expanding on the point made in the preceding paragraph as to the weight to be given to the fact that some of the items of property that were owned from the outset remained in the hands of that party. In that context, there was no occasion to mention that the rent was deposited into the joint equity line of credit. There is no reason to suppose that the judge overlooked that fact, particularly in light of the judge's description of the parties' relationship as a true economic partnership.
5. As to paragraph (g), it cannot be inferred that the judge failed to take any of the matters earlier referred to into account in conducting the 'quantitative reflection' of evaluating the parties' respective contributions.
6. Otherwise, Ms B's submissions in support of particular 7 do not rise above assertion or claims of weighting errors.
7. For these reasons, there is no merit in particular 7.

1. For the above reasons, nothing in any of particulars 1 ‑ 7 provides a basis to interfere with the judge's finding that the parties' contributions should be viewed as being of equal value. Consequently, the sole ground of appeal fails, and the appeal must be dismissed.
2. We would hear from the parties as to costs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

Research Associate/Orderly to the Honourable Justice Beech

CITATION : MIB -v- JAP [2019] WASCA 175 (S)

Procedure - Costs - Appeal from Family Court of Western Australia - Appeal wholly unsuccessful and wholly without merit - Whether circumstances justify departure from the presumptive position of no order as to costs

Family Court Act 1997 (WA), s 237

CDW v LVE [2015] WASCA 247 (S)

T v S [2015] WASCA 225 (S)

Trask & Westlake (Costs) [2015] FamCAFC 214

(This judgment was delivered extemporaneously on 8 November 2019 and has been edited from the transcript.)

1. There are many cases in which it has been assumed that appeals to this court are proceedings under the Family Court Act 1997 (WA) to which s 237 applies (see, for example, CDW v LVE[85] and the cases there cited). There is no reason to doubt the correctness of that assumption.
2. By s 237(1) of the Family Court Act, each party to proceedings under the Act is to bear the party's own costs, subject, relevantly, to subsection (2). However, by subsection (2), if this court is of the opinion that there are circumstances that justify it in doing so, this court may make an order departing from that position.
3. By s 237(3), in considering what orders should be made under subsection (2), the court must have regard to the matters therein set out in pars (a) ‑ (g) of that subsection:

(a) the financial circumstances of each of the parties to the proceedings; and

(b) whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party; and

(c) the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters; and

(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of a court; and

(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings; and

(f) whether a party to the proceedings has made an offer in writing to another party to the proceedings to settle the proceedings and the terms of any such offer; and

(g) such other matters as the court considers relevant.

1. The relevant principles are referred to in CDW and T v S.[86]
2. The factors in pars (a), (c) and (e) are relevant for present purposes.
3. The appellant has been wholly unsuccessful in these appeal proceedings. In our view, the appellant's ground was wholly without merit. Moreover, none of the particulars in support of the ground had substance. The nature of the proceedings as an appeal is also relevant to the exercise of discretion. In Trask & Westlake (Costs),[87] the Full Court of the Family Court of Australia observed, in relation to the equivalent s 117 of the Family Law Act 1975 (Cth):

[W]hile costs do not 'follow the event' any more on an appeal than they do in any other proceedings (s 117(1)), it is often said that a party being wholly unsuccessful in an appeal, which by definition seeks to deny the other party the 'fruits of their judgment', can be of great significant.

1. The appellant's conduct of the appeal counts in favour of an adverse costs order. First, the grounds of appeal in the appellant's case were flawed, in that they did not impugn the critical finding of equal contributions by the parties. This resulted in a very late amendment application, well into the hearing. Secondly, some of the central flaws in the appellant's case on appeal were identified in the respondent's written submissions. Notwithstanding that, the appellant pursued the appeal through to its hearing and determination.
2. We have also taken into account the financial circumstances of each of the parties, so far as they are known to us, as revealed by the primary decision. The result of the primary judge's order is that the appellant will receive a 55% share of the matrimonial property within the region of $4 million. No party sought to adduce any further evidence of the parties' financial circumstances.
3. We are satisfied in all these circumstances that it is justified to make an order departing from the position provided for in s 237(1), by making an order that the appellant pay the respondent's costs of the appeal.
4. At the hearing this morning, senior counsel for the appellant did not oppose the making of such an order, on the proviso that the costs should be set off against par 1(a) of Moroni AJ's orders in the primary proceedings. In all of the circumstances, we consider that qualification to be appropriate.
5. As to the question of fixing costs, there was no opposition to fixing the sum of $35,000 sought by the respondent. That, too, is an appropriate order.
6. The court makes the following orders:

(2) The appellant pay the respondent's costs fixed in the sum of $35,000, such sum to be set off against the money to be paid to the appellant, pursuant to par 1(a) of Moroni AJ's orders made 12 October 2018.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

Research Associate/Orderly to the Honourable Justice Beech

[1] P v B [2018] FCWA 200 (primary reasons) [18] - [19].

[2] Primary reasons [16] - [17], [22].

[3] Primary reasons [20], [119]; ts 11, 66; GAB 3, 220.

[6] FDR v JDL [No 2] [2016] WASCA 231 [25].

[19] Appellant's submissions [4]; appeal ts 5 - 6.

[20] Primary reasons [80](a), [82]. The other 50% was then held by Mr P's business partner: GAB 6, [37](b).

[23] Primary reasons [80] - [81], [84] - [87].

[24] Primary reasons [92] - [93]. See also [89].

[27] Primary reasons [94], [97](b).

[28] Primary reasons [100] - [102].

[29] Primary reasons [103] - [110], [112] - [113], [116].

[30] Primary reasons [122] - [125].

[31] Primary reasons [35], [126](a)

[32] Primary reasons [128] - [134].

[36] Primary reasons [147] - [152].

[40] Primary reasons [187] - [189].

[43] House v The King [1936] HCA 40; (1936) 55 CLR 499.

[44] Mallet v Mallet [1984] HCA 21; (1984) 156 CLR 605, 610, 621 - 622, 634; Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513, 517 - 518, 535; Bondelmonte v Bondelmonte [2017] HCA 8; (2017) 259 CLR 662 [31].

[46] Mallet (614); Dodds v Kennedy [2011] WASCA 32 [4].

[47] Williams v Minister Aboriginal Land Rights Act 1983 [2000] NSWCA 255; [2000] Aust Torts Reports 81-578 [60].

[48] Williams [60]. This passage has been applied many times by this and other courts. See H v P [2011] WASCA 78 [43] ‑ [44]; Proudlove v Burridge [2017] WASCA 6; (2017) 79 MVR 257 [127] and the cases there cited.

[49] Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; (2001) 117 FCR 424 [24] ‑[29]; Aldi Foods Pty Ltd v Moroccanoil Israel Ltd [2018] FCAFC 93; (2018) 261 FCR 301 [7] ‑ [10], [47] ‑ [51]; Craig-Bridges v NSW Trustee and Guardian [2017] NSWCA 197 [116] ‑ [118]; Smart v Power [2019] WASCA 106 [103], [106].

[52] Appeal ts 5 - 6, referring to primary reasons [78].

[53] Appellant's submissions [9]; appeal ts 8; particular 4, all referring to primary reasons [143].

[54] Appellant's submissions [10]; appeal ts 7, 8.

[57] Expert report of Duncan Calder dated 4 September 2018, GAB 330, 343 - 345.

[63] Appellant's submissions [16] - [17]; appeal ts 22, 24.

[64] Appellant's submissions [16], [18] ‑ [23].

[66] Primary reasons [93], [112]. See [25] and [28] above.

[72] See [41] above.

[73] Appellant's submissions [21] - [23]; appeal ts 26 - 29.

[74] Primary reasons [95] - [101], [147].

[76] Appellant's submissions [30]; appeal ts 31, 32.

[77] Appellant's submissions [30] - [31].

[85] CDW v LVE [2015] WASCA 247 (S) [4].

[86] T v S [2015] WASCA 225 (S).

[87] Trask & Westlake (Costs) [2015] FamCAFC 214 [4].